Eric R. Clark, & Clark & Assocs., PLLC v. Jones Gledhill Fuhrman Gourley, P.A.

• Citation: 163 Idaho 215,409 P.3d 795
• Decision Date: 27 December 2017
• Docket Number: Docket No. 44477
• Parties: Eric R. CLARK, and Clark & Associates, PLLC, Plaintiffs-Appellants, v. JONES GLEDHILL FUHRMAN GOURLEY, P.A., an Idaho Professional Association; William Fuhrman, individually, and as an agent of Jones Gledhill Fuhrman Gourley, P.A. ; and Christopher Graham, individually, and as an agent of Jones Gledhill Fuhrman and Gourley, P.A., Defendants-Respondents.
• Court: United States State Supreme Court of Idaho

163 Idaho 215

409 P.3d 795

Eric R. CLARK, and Clark & Associates, PLLC, Plaintiffs-Appellants,

v.JONES GLEDHILL FUHRMAN GOURLEY, P.A., an Idaho Professional Association; William Fuhrman, individually, and as an agent of Jones Gledhill Fuhrman Gourley, P.A. ; and Christopher Graham, individually, and as an agent of Jones Gledhill Fuhrman and Gourley, P.A., Defendants-Respondents.

Docket No. 44477

Supreme Court of Idaho, Boise, August 2017 Term.

Filed: December 27, 2017

Rehearing Denied February 2, 2018

Clark & Associates, Eagle, for appellants. Eric R. Clark argued.

Anderson, Schwartzman, Woodard, Brailsford, PLLC, Boise, for respondents. Amanda K. Brailsford argued.

BURDICK, Chief Justice.

This appeal from the Ada County district court concerns attorney liens under Idaho Code section 3-205. In March 2016, Eric R. Clark and Clark and Associates, PLLC (collectively, Clark) sued the law firm of Jones Gledhill Fuhrman Gourley, P.A., and two individuals associated with that firm—William Fuhrman and Christopher Graham (collectively, Jones Gledhill). Clark alleged that Jones Gledhill, as Clark's former opposing counsel, was liable for failing to protect his attorney lien. Jones Gledhill moved to dismiss Clark's amended complaint (complaint) under Idaho Rule of Civil Procedure 12(b)(6), and the district court granted the motion. In addition to dismissing Clark's complaint, the district court sealed several documents containing correspondence with and information about Clark's former clients, denied Clark's motion to amend, and awarded attorney fees under Idaho Code section 12-121 to Jones Gledhill. We affirm.

I. FACTUAL AND PROCEDURAL BACKGROUND

The genesis of this appeal is Forbush v. Sagecrest Multi Family Property Owners' Association, Inc. , 162 Idaho 317, 396 P.3d 1199 (2017), a tort case that was recently before this Court in which a water heater emitted hazardous levels of carbon monoxide, killing one and seriously injuring another. In Forbush , Clark initially represented the plaintiffs ( Forbush plaintiffs), and Jones Gledhill represented two of the defendants, Anfinson Plumbing and Daniel Bakken ( Forbush defendants). As his co-counsel, Clark enlisted the Spence Law Firm (Spence), but after approximately three years, irreconcilable differences came to plague Clark and Spence's relationship, and Clark withdrew.

After withdrawing, in September 2015, Clark sent a letter to Jones Gledhill, which stated that he was "asserting an attorney lien according to I.C. § 3-205, which attaches to any settlement or verdict. Please include [Clark's] name on any settlement checks payable to the [ Forbush ] plaintiffs or any other payments related to a verdict or judgment."

A settlement between the Forbush defendants and the Forbush plaintiffs was reached in January 2016, at which time the Forbush defendants wrote a settlement check to the Forbush plaintiffs. Without informing Clark of the settlement, Jones Gledhill forwarded the settlement check to Spence. When Clark learned of the settlement and contacted Jones Gledhill, the enforceability of Clark's claimed lien became disputed. Clark then filed a complaint against Jones Gledhill in March 2016, alleging Jones Gledhill had "breached [its] duty to protect Clark's lien...." Prior to filing this lawsuit, Clark had also filed lawsuits against Spence and the Forbush plaintiffs with claims arising from their alleged failures to protect Clark's lien.

Jones Gledhill moved to dismiss Clark's complaint under Idaho Rule of Civil Procedure 12(b)(6). Clark responded by filing a brief, declaration, and several exhibits revealing information about and correspondence with the Forbush plaintiffs, his former clients. Jones Gledhill moved to strike this information and correspondence. Moreover, the Forbush plaintiffs intervened and moved for the information and correspondence to be sealed as confidential client information. The district court granted Jones Gledhill's motions to strike and to dismiss. It further granted the Forbush plaintiffs' motion to seal. Thereafter, Clark filed a motion to amend his complaint, but the district court denied the motion. Finally, the district court granted Jones Gledhill's request for attorney fees under Idaho Code section 12-121, finding that Clark had pursued the case frivolously, unreasonably, and without foundation. Clark timely appeals.

II. ISSUES ON APPEAL

1. Did the district court properly grant Jones Gledhill's motion to dismiss?

2. Did the district court abuse its discretion by awarding attorney fees under Idaho Code section 12-121 to Jones Gledhill?

3. Did the district court abuse its discretion by sealing certain documents?

4. Did the district court abuse its discretion when it denied Clark's motion to amend?

5. Is the prevailing party entitled to attorney fees on appeal?

III. ANALYSIS

A. The district court properly granted Jones Gledhill's motion to dismiss.

This Court reviews a district court's dismissal under Idaho Rule of Civil Procedure 12(b)(6) de novo . Colafranceschi v. Briley , 159 Idaho 31, 34, 355 P.3d 1261, 1264 (2015).

"When considering a 12(b)(6) motion, we look only to the pleadings to determine whether a claim for relief has been stated." "A motion to dismiss for failure to state a claim should not be granted ‘unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim that would entitle [the plaintiff] to relief.’ " On review, this Court draws all reasonable inferences in favor of the non-moving party.

Id. (citations omitted).

Clark's complaint, the focus of our Rule 12(b)(6) inquiry, alleges Jones Gledhill is liable for "damages of at least $500,000.00" for failing to protect Clark's claimed attorney lien. The key allegations of Clark's complaint are specifically as follows:

21. In January 2016, Anfinson Plumbing and Bakken settled with the Plaintiffs in the Forbush case for $1,000,000.00 and sent a check to the Spence Firm.

22. Even before delivery to The Spence Firm, Clark's lien attached to the settlement funds in the hands of the Defendants.

23. Notwithstanding the actual knowledge that Clark had represented the Plaintiffs in the Forbush case and despite Clark's written request that Defendants Fuhrman, Graham and Jones Gledhill Fuhrman Gourley, P.A. protect Clark's lien by listing Clark as a payee on any settlement check, Defendants Fuhrman, Graham and Jones Gledhill Fuhrman Gourley, P.A. provided the $1,000,000.00 settlement funds to the Spence Firm without protecting Clark's lien.

24. Thereafter, The Spence Firm and/or the Forbush Plaintiffs converted Clark's fees.

25. As the Defendants had constructive and actual knowledge of Clark's attorney lien, the Defendants owed Clark a duty to protect his lien.

26. This duty included protecting Clark's lien by complying with Clark's request and placing Clark's name as a payee on the $1,000,000.00 Anfinson Plumbing settlement check.

27. The Defendants Fuhrman, Graham and Jones Gledhill Fuhrman Gourley, P.A. breached their duty to protect Clark's lien when the Defendants delivered the settlement check to the Spence Firm without protecting Clark [sic] lien interest.

28. As a direct and proximate result of the negligence of Defendants Fuhrman, Graham and Jones Gledhill Fuhrman Gourley, P.A., Clark has suffered damages of at least $500,000.00, plus accumulating interest, costs and attorney fees.

29. In the alternative, Defendants are required to compensate Clark for Clark's time and costs expended in recovering his attorney fees from The Spence Law Firm and/or his former clients in an amount to be proven at trial.

Clark's complaint then segues into requests for attorney fees and a jury trial before reiterating his damages requests in the complaint's prayer for relief. Nowhere does Clark allege or identify the elements of a specific cause of action. Cf. Brown v. City of Pocatello , 148 Idaho 802, 809–10, 229 P.3d 1164, 1171–72 (2010) ("Our notice pleading standard requires more than a naked recitation of facts from which a hyper-vigilant attorney could possibly foresee the possibility of a given cause of action."). Nevertheless, adhering to Rule 12(b)(6)'s command of drawing all reasonable inferences in favor of Clark, the non-moving party, we construe Clark's complaint as attempting to allege a claim in tort for "failing to protect his lien" and to enforce his lien against Jones Gledhill. Though we address each in turn, our analysis starts with the threshold question of whether section 3-205 gave rise to a lien in favor of Clark in the first place.

Idaho recognizes both possessory and charging liens for attorney fees. See Frazee v. Frazee , 104 Idaho 463, 464, 660 P.2d 928, 929 (1983). "The possessory or retaining lien is of common law origin and allows an attorney to keep possession of documents, money or other property obtained in his professional capacity until he receives payment for his professional services." Id. This lien is considered "passive and not enforceable by foreclosure and sale." Id. The charging lien, by contrast, "is a lien for the attorney's ‘services rendered in procuring a judgment, decree, or award for his client, which attaches to the client's cause of action, verdict and judgment and the proceeds thereof[,]’ ... is not dependent upon possession, and is capable of adjudication and enforcement." Id. at 465, 660 P.2d at 930 (quoting Stuart M. Speiser, Attorneys' Fees § 16:14 (1973) ). Common law did not recognize the charging lien, but it has been codified under Idaho Code section 3-205, which provides:

The measure and mode of compensation of attorneys and counselors at law is left to the agreement, express or implied, of the parties, which is not restrained by law. From the commencement of an action, or the service of an answer containing a counterclaim, the attorney who appears for a party has a lien upon his client's cause of action or counterclaim, which attaches to a verdict, report, decision or judgment in his client's favor and the proceeds

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